Aer Lingus slates DAA passenger traffic targets

Aer Lingus slates DAA passenger traffic targets

‘The airline was making its initial response to the Aviation Regulator as part of what is likely to be a long determination process for setting the next price cap governing airport charges at Dublin Airport.’ Stock photo

The airline said in an 18-page statement to the Commission for Aviation Regulation that there had been “delays in the investment needed at the airport to increase capacity and adequately cater for the higher passenger numbers”.

The submission is the latest broadside from the airline in a war of words between it and the airport authority over facilities at the airport.

DAA “has not always provided Aer Lingus and other airlines with an appropriate quality of service”, said Aer Lingus.

In the meantime, “DAA has profited too much from beating the traffic forecast used in the last determination”.

The airline was making its initial response to the Aviation Regulator as part of what is likely to be a long determination process for setting the next price cap governing airport charges at Dublin Airport.

Passenger growth at the airport is 20pc higher than the Commission expected at the time of the last determination, with the airport expecting to surpass 30 million passengers next year, it said.

This should lead to economies of scale from which passengers should benefit, said the airline.

The Aer Lingus submission said that a previous determination by the regulator of the maximum price the airport authority is allowed to charge per passenger “would have benefited from a different treatment of passenger forecasts”.

“The target should have been higher and the DAA should not have been able to enjoy such large rewards from beating a target that it had argued was too challenging,” it said.

Aer Lingus urged the aviation regulator to “think about the rewards available to the DAA from beating traffic forecasts”.

It added: “There needs to be incentives for the DAA to develop good intelligence about likely traffic levels at the airport and to respond in a timely manner to a changed environment, rather than deferring decisions on its investment plans.”

The current determination placed no requirement on the DAA to undertake additional investments to meet the extra demand and has allowed the DAA to accrue profits on the basis of exceeding a baseline forecast for four years. The price cap should provide the DAA with the types of incentives it would face if it were subject to greater competitive pressures, said Aer Lingus.

“Yet, arguably in the last five years the DAA has realised profits by persuading the Commission to adopt a low traffic forecast and then beating that forecast,” it added.

“While a firm, such as Aer Lingus, operating in a competitive environment wants to increase sales, beating a single sales forecast is not, however, a sufficient condition for earning additional profit — as is the case for Dublin Airport.

“Nor could we afford to lock in to investment plans with no regard to changing market conditions. Moreover, we could not afford to increase traffic with no regard to the experience of our customers,” the airline argued.

But the Aer Lingus position comes as something of an about-face to its stance ahead of the price determination for the current regulatory period.

A submission from the airline in 2014 stated that “there is no pressing need for further capacity expansion in the coming period”.

It went on to say that, in Aer Lingus’s opinion, DAA’s then proposed €308m capital investment plan “is larger than is necessary for a period that involves no justifiable case for significant capacity expansion”.